Section A

BankCorp lends £100,000 to a manufacturing company and takes a floating charge over the company's inventory. BankCorp fails to register the charge with the Registrar of Companies within the required 21-day period. What is the consequence of this failure to register?

Answer options:

The charge remains valid, but BankCorp must pay a late registration penalty.

The charge is void against a liquidator, administrator, and any creditor of the company, and the loan becomes immediately repayable.

The floating charge automatically converts into a fixed charge.

The loan agreement is entirely void and the company does not have to repay the money.

How to approach this question

Recall the strict rules and consequences regarding the registration of charges at Companies House.

Full Answer

B.The charge is void against a liquidator, administrator, and any creditor of the company, and the loan becomes immediately repayable.✓ Correct

If a registrable charge is not registered within 21 days of creation, it becomes void against a liquidator, administrator, and any creditor. This means the lender loses their security and becomes an unsecured creditor. Furthermore, the underlying debt becomes immediately repayable.

Common mistakes

Thinking the debt itself is cancelled. The debt remains, but the *security* (the charge) is lost.

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Practice the full ACCA LW — Corporate and Business Law Practice Exam 5

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